Final Results

RNS Number : 0987Z

Brickability Group PLC

16 September 2020

 

Brickability Group plc

("Brickability" or " the Group")

Preliminary results for the year ended 31 March 2020

A strong first year as a public company

Highlights

· Full year results in line with market expectations at IPO

· Group revenue increased by 14.6% to £187.1 million (2019: £163.3 million), up 0.6% on like for like basis

· Adjusted EBITDA* increased by 10.1% to £19.5 million (2019: £17.7 million)

· Profit before Tax increased by 41.7% to £12.2 million (2019: £8.6 million)

· £27.2 million of cash on balance sheet at 31 March 2020 with £10 million of undrawn headroom in bank facility

· Final dividend declared of 1.085p per share giving a total dividend for the year of 1.9528p 

Financial Summary

	2020 £m	2019 £m	% Change
Revenue	187.1	163.3	14.6
Adjusted EBITDA*	19.5	17.7	10.1
Profit before Tax	12.2	8.6	41.7
Adjusted EPS**	4.03p	2.80p	43.9
Dividends paid and proposed per share in respect of this year	1.9528p	-
Net Cash/ (Debt)***	2.3	(19.5)

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, exceptional and acquisition costs.

**Adjusted EPS is calculated by dividing the profit for the year by the numbers of ordinary shares at IPO

*** Net Cash/(Debt) is defined as cash less bank debt.

Operational Summary

· Completion of successful IPO on AIM

· Completed seven acquisitions during the year in-line with strategy at IPO

· Acquisition pipeline continues to build with opportunities to add to distribution and product offering

· New product ranges added to the Group

· Management strengthened both on operations and finance

· Advanced preparations put in place for business continuity post EU withdrawal

COVID-19

· All businesses fully operational post lock down

· New health & safety protocols in place as a result of COVID-19

· Post-COVID market expected to see:

o  Pent-up demand for houses post lock down

o  Increased demand for houses as opposed to flats

o  Stamp duty reduction

o  New Help to Buy scheme 2021-23

o  Affordable homes programme 2021-26

Outlook

· Underlying fundamentals for new build homes remains robust

· Recovery well underway and outlook remains positive whilst still dependent on any further COVID-19 impact

· While April saw tough trading conditions there has been a significant improvement in each month since with EBITDA in both June and July being ahead of the corresponding months in 2019. Current trading remains encouraging with turnover in July 2020 1.6% ahead of July 2019

· Progressing a healthy pipeline of acquisition opportunities

John Richards, Chairman, said:

" I am delighted with our results in our first year as a public company.  Our market and our economy have clearly had challenges, however, the growing strength of the group along with our flexible cost base has enabled us to be in line with expectations. While the outlook is of course pandemic dependent, our core market looks strong and this is reflected in current trading levels. We believe that the group is well placed to serve that market and this effort will be reinforced by further organic and acquisition based growth."

Enquiries: Brickability Group PLC
John Richards, Chairman Alan Simpson, Chief Executive officer
Stuart Overend, Chief Financial Officer c/o Montfort Communications
Cenkos Securities (Nomad and Broker) Max Hartley, Max Gould (Corporate Finance)	0207 397 8900
Julian Morse, Alex Pollen (Sales)
Montfort Communications (Financial PR)	0203 770 7916
James Olley Woolf Thomson Jones

Chairman's Statement

I am delighted to report on our first year as a public company which saw a successful listing, seven strategic acquisitions and an adjusted EBITDA of £19.5 million.

Bearing in mind the market challenges of the pre-general election period, the unusually wet weather in late January and February and the early ramifications of the COVID-19 lockdown from mid-March, the result is one with which we are very satisfied.

At our IPO, we made our growth and bolt-on acquisition strategy very clear and I am pleased to note that we have been able to deliver against those ambitions.

The market for the year ending 31st March 2020 began robustly, particularly the demand for new build housing, but softened during the third quarter reflecting both political and economic uncertainty as we went through the Brexit process and approached the General Election. The market for new build housing began to improve at the start of 2020 only to slow again in the face of record levels of rainfall and turned down sharply as a result of the effects of the COVID-19 pandemic. These market challenges again show the Group's performance in a positive light.

From mid-May 2020, construction and the new build housing market have begun to significantly improve as businesses return to work, although initial output levels were restricted as builders came to terms with the new health and safety protocols around which they now operate. Higher levels of market activity have now returned and consequently product demand, and the fundamentals for construction and in particular for new build housing remain strong, as does government support for increasing the UK housing supply.

The business continues to operate with strong focus on costs. This 'lean' approach has enabled the Group to cut overheads quickly as the restrictions driven by 'lockdown' took hold. After a tough April the business returned to profitability in May and in June sales returned to 83% of June 2019. In July the performance was even stronger.

Details of the Group's acquisitions can be found in the Chief Executive's Review, however, all of them are already contributing to performance, have added to our management strength and have helped broaden our distribution offering. Our pipeline of acquisitions is very encouraging and provided that those businesses meet our very stringent criteria that include sustainability credentials, EBITDA multiples and limits to upfront payment, we will continue to follow that strategy as outlined at the time of the IPO. Potential acquisitions include those businesses that distribute factory assembled building components and those that are involved with Modern Methods of Construction.

Shareholder Returns & Dividends

The Group paid an interim dividend of 0.87p per ordinary share on 20th December 2019. While the Board expected to pay a final dividend of 1.74p per ordinary share for the year ended 31 March 2020, bearing in mind the ramifications of the COVID-19 pandemic and our prudent approach, we have determined that we will pay a dividend 1.085p per ordinary share. Subject to shareholder approval, the final dividend will be paid on 23rd October 2020 to shareholders on the register on 25th September 2020.

Employees

I would like to thank all of our employees for their remarkable commitment and performance during the challenges of our first year as a public company. Despite the political and economic demands of the third quarter and the record rainfall and ramifications of the Government's response to the COVID-19 pandemic in the final quarter, their determination, the excellence of their customer contacts and their focus have enabled the Group's performance to remain on schedule. My sincere thanks also for our employees' patience, understanding and discipline during the early parts of 2020-21. Our employees are able to work within our new health and safety protocols which are now well established.

John Richards

Chairman

Chief Executive's Review

We delivered against our strategy of bolt-on acquisitions, with a total of seven new businesses joining the Group during the year. These businesses brought with them excellent management which has strengthened our position and this influx of talent has been added to by some recruitment of excellent management from outside the Group that has, in particular, strengthened our finance team.

The market in the early months of the year ending 31 March 2020 was mostly stable and, in places, was encouraging particularly in the new build housing market. Quarter 3 saw challenging trading conditions as the market slowed in the face of both Brexit and the upcoming general election. The final quarter began well and indeed a bounce in both activity and demand was apparent before the record levels of rainfall caused interruptions to construction activity and before the implications of the government response to the COVID-19 pandemic caused a much steeper decline in demand.

Despite these challenges the Group achieved revenue in the year ended 31 March 2020 of £187 million (2019 £163 million) with Group adjusted EBITDA of £19.5 million (2019 £17.7 million).

Our strong balance sheet and cash conversion have enabled us to continue with our strategy of growth and acquisitions. Seven acquisitions were made during the year; LBT Facades and Brickmongers, which strengthened our brick distribution in the North West and the South Coast along with our range of cladding materials. Bespoke Brick and the Brick Slip Business brought us further strength in imported bricks, while DSH Flooring is our first venture into this area of construction materials. UPlastics has significantly strengthened our cement fibreboard offering, while McCann Roofing brings further product ranges and geographic coverage to our roofing distribution. We have also continued to grow organically with the creation of a new cladding division headed up by one of that industry's most experienced sales managers.

All of our acquisitions have met our demanding investment criteria:

· Every acquisition has to complement our established routes to market.

· We aim to pay a maximum of 60% upfront for a business with the remainder deferred and contingent upon performance.

· We have defined limits of EBITDA multiples that we will pay along with expected minimum margin levels.

· We also demand that businesses bring with them high quality management whenever possible.

I am pleased to report that our acquisition pipeline continues to be in a very healthy position and I am excited about some of the potential opportunities. We expect to continue to fund our bolt-on acquisition programme from our cash generation and we will consider businesses that strengthen our current product ranges or our geographic coverage, along with those that can bring expertise in new products that serve our existing markets.

The health and safety of everyone who works within this business is a critical priority. The year to 31 March 2020 we re-evaluated all of our health and safety processes and procedures, along with our training guided by our external partner, Safety Forward. Every business within the Group now has an enhanced plan, a set of revised standards and responsibilities and an accelerated timeframe for health and safety. The return to work protocols following the COVID-19 pandemic have presented their own challenges, however, they are now in place, are robust and included a comprehensive briefing for each person on their return to work, along with a risk assessment to be completed for every employee who has a need to visit a third party site or premises. The same robust protocols and risk assessments apply to visitors to any of our premises.

Health and safety is reviewed at each scheduled board meeting and indeed group management board meeting. We have continued to develop and strengthen our relationships with our key suppliers, both in the UK and abroad, and have prepared accordingly to ensure that our final relationship with the EU will not affect our ability to obtain and distribute product to our customers, whatever form that relationship might take. The same focus applies with our customers and, with each acquisition, we either gain new customers or are able to offer newly acquired businesses access to the strength of our existing customer base.

In terms of outlook, while the market for building materials was at very low levels in April, we have seen a continued increase in demand since, albeit employing new and very different safety and social distancing measures. All of our sites are open and we have applied stringent control of costs during the 'lock down' period and continue to do so. While the outlook for the remainder of this financial year continues to be uncertain, the underlying fundamentals for construction and in particular new build homes remain robust. Looking to the longer-term, we believe the outlook for our markets remains positive, supporting our confidence in the prospects for the Group .

Alan J Simpson

Chief Executive

Financial Review

2020 was a solid performance, given the political events at the end of 2019 and the poor weather in the first two months of 2020.

Revenue

Revenue totalled £187.1 million for the year ended 31 March 2020. This represented an increase of 14.6% over the previous year (2019: £163.3 million).

Gross Profit

Gross profit for the year increased to £37.7 million from £32.9 million with a consistent gross margin of 20.1% over both years.

Adjusted EBITDA

Adjusted EBITDA increased by 10.1% to £19.5m for the year ended

31 March 2020. Detailed segmental analysis is per note 3 of this preliminary statement. Heating, Plumbing & Joinery Adjusted EBITDA increased from £4.9m to £6.2m through the strong performance of Towelrads, the improved performance of Frazer Simpson and FSN Doors and the addition of DSH Flooring.  Roofing adjusted EBITDA decreased by £0.1m from £3.8m to £3.7m on the back of the poor turnover in the second half of the year. Bricks & Building Material adjusted EBITDA increased from £10.8m to £11.0 million.

Profit Before Tax

Profit before taxation was £12.2million, an increase of £3.6 million on 2019 (£8.6 million) of which £2.0 million was due to the reduced finance expenses.

EPS

Earnings per share decreased from 2,795.84p to 6.88p per share due to the number of shares issued at IPO. The Adjusted EPS based on the numbers of shares at 31 March 2020 was up 43.9% to 4.03p (2019 2.80p).

Taxation

The charge for taxation was £2.9 million (2019: £2.1 million), an effective rate of taxation (tax expense divided by profit before tax) of 23.7% (2019: 24.9%).

Cash Flow and Net Debt

Operating cash flows before movements in working capital increased to £21.0m up from £17.3m in 2019. Cash generated from operations decreased to £20.9m from £23.6m due to the reversal of creditor movement at the year ended 31 March 2019 and the additional working capital balances from acquisitions made during the year. At 31 March 2020, net cash was £2.3 million representing a £21.2 million improvement on 31 March 2019 (net debt of £19.5 million). This was after new equity subscription capital investment of £43.9 million, acquisition of new businesses of £11.4m, dividend payments of £2 million and tax of £4.7 million. We continue to expect that the Brickability Group will remain a business that is cash generative.

Bank Facilities

The Group has agreed new debt facilities with HSBC, totalling £30 million and a standby government backed loan of £5m. This consists of a £25 million revolving credit facility repayable in full in March 2023 (with the option of two, one-year extensions), a £5 million overdraft facility until March 2023, and a £5m standby government backed loan. The Board do not plan to use the standby government loan however it is credit approved.

Interest and Financing Costs

Finance costs reduced substantially following the listing as the investor loan notes were repaid as part of the process. The Company refinanced to HSBC on the 3 March 2020 which has lower margin than the previous facility.

Dividends

The Board proposed a final dividend of 1.085p per share giving a total dividend for the year of 1.9528p. This final dividend is expected to be paid on 23 October 2020 to shareholders on the register on 25 September 2020 with an ex-dividend date of 24th September 2020. Our dividend is 2.1x times profit after tax and 4.3x Adjusted EBITDA. The Board considers this to be a prudent level of cover. The Group remains committed to a progressive dividend policy.

Stuart J Overend

Chief Financial Officer

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 March 2020

 

Notes		2020 £'000	2019 (Restated) £'000
Revenue Cost of sales		187,126 (149,442)	163,294 (130,577)
Gross profit		37,684	32,717
Other operating income		26	96
Administrative expenses		(17,766)	(14,540)
Impairment losses on financial assets		(433)	(542)
Depreciation and amortisation		(4,387)	(3,555)
Finance income		71	31
Finance expense		(2,527)	(4,489)
Share of post-tax (loss)/ profit of equity accounted associates		(32)	13
Fair value losses		(45)	(1,135)
Exceptional income	5	2,000	-
Exceptional expenses	5	(2,407)	-
Profit before tax	4	12,184	8,596
Tax expense		(2,893)	(2,141)
Profit for the year and total comprehensive income		9,291	6,455
Attributable to:
Equity holders of the parent		9,291	6,455
Earnings per share
Basic earnings per share	7	4.79 p	4.51 p
Diluted earnings per share	7	4.77 p	4.51 p

All results relate to continuing operations.

Consolidated Balance Sheet

31 March 2020

Notes		2020 £'000	2019 (Restated) £'000	As at 1 Apr 2018 (Restated) £'000
Non-current assets
Property, plantandequipment		4,173	3,514	3,262
Right of use assets		6,375	2,173	1,617
Intangibleassets		78,050	66,753	67,216
Investmentsin equity accountedassociates		352	1,292	636
Deferredtaxassets		205	744	300
Trade and other receivables		391	333	146
Total non-current assets		89,546	74,809	73,177
Current assets
Inventories		9,791	5,422	5,031
Trade and other receivables		36,560	34,137	27,770
Cash and cash equivalents		27,269	17,001	5,346
Total current assets		73,620	56,560	38,147
Total assets		163,166	131,369	111,324
Current liabilities
Trade and other payables		(41,912)	(35,094)	(23,034)
Current income tax liabilities		(277)	(1,688)	(1,798)
Loans and borrowings	9	-	(3,053)	(3,158)
Lease liabilities		(776)	(428)	(340)
Total current liabilities		(42,965)	(40,263)	(28,330)
Non-current liabilities
Trade and other payables		(2,402)	(4,507)	(7,095)
Loans and borrowings	9	(24,912)	(62,335)	(59,718)
Lease liabilities		(5,802)	(1,705)	(1,259)
Derivative financial liabilities		-	(106)	-
Provisions		(1,389)	(1,975)	(2,338)
Deferred tax liabilities		(5,631)	(4,092)	(4,453)
Total non-current liabilities		(40,136)	(74,720)	(74,863)
Total liabilities		(83,101)	(114,983)	(103,193)
Net assets		80,065	16,386	8,131

		2020 £'000	2019 (Restated) £'000	As at 1 Apr 2018 (Restated) £'000
Equity
Called up share capital		2,305	4	4
Share premium account		49,999	8,970	7,170
Capital redemption reserve		2	-	-
Share-based payment reserve		56	-	-
Merger reserve		1,245	1,245	1,245
Retained earnings		26,458	6,167	(288)
Total equity		80,065	16,386	8,131

 

 

Consolidated Statement of Changes in Equity

For the year ended 31 March 2020

		Share capital	Share premium account	Capital redemption	Share-based payments	Merger reserve	Retained Earnings	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000

At 31 March 2019		4	8,970	-	-	1,245	6,167	16,386
Profit for the year		-	-	-	-	-	9,291	9,291
Total comprehensive income for the year		-	-	-	-	-	9,291	9,291
Dividends paid		-	-	-	-	-	(2,000)	(2,000)
Issue of paid shares (note 36)		678	44,223	-	-	-	-	44,901
Bonus issue of shares		1,429	(1,429)	-	-	-	-	-
Conversion of debt to equity (note 36)		196	13,736	-	-	-	-	13,932
Purchase of own shares		(2)	-	2	-	-	-	-
Increase in share-based payment reserve		-	-	-	56	-	-	56
Share issue costs		-	(2,501)	-	-	-	-	(2,501)
Share premium reduction		-	(13,000)	-	-	-	13,000	-
Total contributions by and distributions to owners		2,301	41,029	2	56	-	11,000	54,388
At 31 March 2020		2,305	49,999	2	56	1,245	26,458	80,065

 

 

Consolidated Statement of Cash Flows

For the year ended 31 March 2020

	Notes	2020 £'000	2019 (Restated) £'000
Operating activities
Profit for the year		9,291	6,455
Adjustments for:
Depreciation of property, plant and equipment		595	529
Depreciation of right of use assets		717	451
Amortisation of intangible assets		3,059	2,575
Gain on disposal of property, plant & equipment		(8)	(47)
and right of use assets
Foreign exchange losses		4	71
Share-based payments expense		56	-
Share of post-tax loss/ (profit) in equity accounted associates		32	(13)
Impairment of goodwill		16	-
Fair value changes in contingent consideration		45	1,135
Movements in provisions		(586)	(363)
Finance income		(71)	(31)
Finance expense		2,527	4,489
Exceptional expenses		2,407	-
Income tax expense		2,893	2,141
Amortisation of loan note issue costs		2	7
Operating cash flows before movements in working capital		20,979	17,399
Changes in working capital:
Increase in inventories		(1,890)	(371)
Decrease/ (Increase) in trade and other receivables		6,862	(5,058)
(Decrease)/ Increase in trade and other payables		(5,024)	11,588
Cash generated from operations		20,927	23,558
Payment of exceptional acquisition expenses		(320)	-
Interest received		70	31
Interest paid		(6,049)	(1,488)
Income taxes paid		(4,710)	(3,210)
Net cash from operating activities		9,918	18,891
Investing activities
Purchase of property, plant and equipment		(941)	(628)
Proceeds from sale of property, plant and equipment		25	47
Purchase of right of use assets		(32)	-
Proceeds from sale of right of use assets		-	21
Purchase of intangible assets		-	(4)
Acquisition of subsidiaries		(11,426)	(2,645)
Net cash acquired with subsidiary undertakings		5,146	(4)
Acquisition of interests in associates		-	(194)
Dividends received from associates		33	36
Net cash used in investing activities		(7,195)	(3,371)

	Notes	2020 £'000	2019 (Restated) £'000
Financing activities
Equity dividends paid		(2,000)	-
Proceeds from issue of ordinary shares		43,923	1,500
Payment of share issue costs		(414)	-
Payment of exceptional financing costs		(490)	-
Proceeds from bank borrowings		13,015	1,500
Repayment of bank borrowings		(25,000)	(3,158)
Proceeds from loan notes issued		-	1,500
Repayment of loan notes		(14,562)	-
Payment of lease liabilities		(871)	(541)
Payment of deferred consideration		(5,885)	(4,663)
Payment of transaction costs relating to loans and borrowings		(70)	-
Settlement of derivative financial instruments		(105)	-
Net cash flows from financing activities		7,541	(3,862)
Net increase in cash and cash equivalents		10,264	11,658
Cash and cash equivalents at beginning of year		17,001	5,346
Effect of changes in foreign exchange rates		4	(3)
Cash and cash equivalents at end of year		27,269	17,001

Notes to the Preliminary Results

Year ended 31 March 2020

1.  General Information

This announcement was approved by the Board of Directors on 15 September 2020.

Brickability Group plc is a company incorporated in England and Wales (registration number 11123804).  The address of the registered office is South Road, Bridgend Industrial Estate, Bridgend, CF31 3XG.

The financial information set out above does not constitute the Group's statutory accounts for the year ended 31 March 2020 or 2019, but is derived from these accounts.  Statutory accounts for 2019 have been delivered to the Registrar of Companies and those for 2020 will be delivered by 30 September 2020.  The auditors have reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498(2) or (30) of the Companies Act 2006.

2.  Basis of Preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union and the Companies Act 2006 applicable to companies reporting under IFRS.

 For periods up to and including 31 March 2019, the Group prepared its financial statements in accordance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). The Group transitioned from FRS 102 to IFRS as at 1 April 2018 and these consolidated financial statements are the first the Group has prepared in accordance with IFRS.

 The financial statements are presented in pounds sterling, which is the functional currency of the Group. Amounts are rounded to the nearest thousand, unless otherwise stated.

 The financial statements are prepared on the historical cost basis, with the exception of derivative financial instruments which are stated at fair value.

       After making appropriate enquiries, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of signing these financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

 

        COVID-19

 On 31 December 2019, China reported a pneumonia outbreak of unknown cause to the World Health Organisation ("WHO"). On 30 January 2020, the WHO declared a Public Health Emergency of International Concern.

        On 11 March 2020 the WHO declared the virus a pandemic. From this date, day-to-day life in the UK also began to be impacted through announced social distancing measures, with additional stay at home measures being enforced soon after. The scale of the Government interventions and impact on daily life in the UK gave rise to significant market movements, with global lock downs occurring before the Group's reporting date of 31 March 2020.

The assessment of the impact of COVID-19 on the consolidated financial statements requires judgement and affects the estimates included in certain areas, including the assessment of the appropriateness of the going concern basis in preparing the financial statements and the testing for impairment of assets.

Given the timing of the global pandemic, management determined that the conditions in relation to COVID-19 existed at the balance sheet date and therefore the events which quickly unfolded, subsequent to 31 March 2020, provide additional information about conditions which existed at the balance sheet date. Information available to management after the balance sheet date has been considered in the Group's impairment assessment, assessment of recoverability of trade receivables and other relevant areas of the balance sheet. The impact of COVID-19 is considered by the Board to be an adjusting event for the Group.

 

3.  Segmental Analysis

 For management purposes, the Group is organised into segments based on its products and services. The group generates revenue through three main activities and thus has three reportable segments, as follows:

§ Bricks and Building Materials, which incorporates the sale of superior quality building materials to all sectors of the construction industry including national house builders, developers, contractors, general builders and retail to members of the public;

§ Roofing Products and Services, which incorporates the supply of roofing construction services, primarily within the residential construction sector; and

§ Heating, Plumbing and Joinery, which incorporates the sale of high-performance joinery materials and the distribution of radiators and associated parts and accessories.

    The Group's segments are strategic business units that offer different products and services. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions.

 The accounting policies of the reportable segments are the same as the Group's accounting policies as described in note 3. Segment performance is evaluated based on EBITDA, without allocation of depreciation and amortisation, finance expenses and income, impairment losses, fair value movements or the share of results of associates. This is the measure reported to the CODM for the purpose of resource allocation and assessment of segment performance.

The whole of the Group's revenue is generated in the United Kingdom. No individual customer accounts for more than 10% of Group revenue.

Inter-segment sales are eliminated from the results reported to the CODM and from the consolidated financial statements.

	2020
	Bricks and Building Materials £'000	Roofing Products and Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Revenue	143,954	17,104	26,068	187,126
EBITDA	11,469	3,683	6,156	21,308
Centralised costs				(1,805)
Profit on disposal of assets				8
Group adjusted EBITDA				19,511
Impairment of goodwill				(16)
Depreciation				(1,312)
Amortisation				(3,059)
Finance income				71
Finance expense				(2,527)
Share of results of associates				(32)
Fair value gains and losses				(45)
Exceptional income				2,000
Exceptional expenses				(2,407)
Group profit before tax				12,184

	2019 (Restated)
	Bricks and Building Materials £'000	Roofing Products and Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Revenue	123,442	16,513	23,339	163,294
EBITDA	10,774	3,874	4,892	19,540
Centralised costs				(1,856)
Profit or (loss) on disposal of assets				47
Group adjusted EBITDA				17,731
Depreciation				(980)
Amortisation				(2,575)
Finance income				31
Finance expense				(4,489)
Share of results of associates				13
Fair value gains and losses				(1,135)
Group profit before tax				8,596

  For the purposes of monitoring segment performance and allocating resources between segments, the CODM monitors the total non-current and current assets attributable to each segment. All assets are allocated to reportable segments with the exception of those used primarily for corporate purposes (head office), investments in associates and deferred tax assets. Goodwill has been allocated to reportable segments. No other assets are used jointly by reportable segments.

	2020
	Bricks and Building Materials £'000	Roofing Products and Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Non-current segment assets	42,166	19,684	27,134	88,984
Current segment assets	51,856	3,798	10,837	66,491
Total segment assets	94,022	23,482	37,971	155,475
Investment in associates				352
Deferred tax assets				205
Head office				7,134
Group assets				163,166

Total segment liabilities	(34,205)	(2,265)	(4,744)	(41,214)
Loans and borrowings (excluding leases and overdrafts)				(24,912)
Deferred tax liabilities				(5,631)
Other unallocated central liabilities				(11,344)
Group liabilities				(83,101)

	2019 (Restated)
	Bricks and Building Materials £'000	Roofing Products and Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Non-current segment assets	24,309	19,956	28,499	72,764
Current segment assets	41,104	3,924	9,615	54,643
Total segment assets	65,413	23,880	38,114	127,407
Investment in associates				1,292
Deferred tax assets				744
Head office				1,926
Group assets				131,369

Total segment liabilities	(27,683)	(3,397)	(4,691)	(35,771)
Loans and borrowings (excluding leases and overdrafts)				(36,422)
Derivative financial liabilities				(106)
Deferred tax liabilities				(4,092)
Other unallocated central liabilities				(38,592)
Group liabilities				(114,983)

	As at 1 April 2018 (Restated)
	Bricks and Building Materials £'000	Roofing Products and Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Non-current segment assets	21,583	20,373	30,270	72,226
Current segment assets	25,292	3,297	8,954	37,543
Total segment assets	46,875	23,670	39,224	109,769
Investment in associates				636
Deferred tax assets				300
Head office				619
Group assets				111,324

Total segment liabilities	(15,188)	(2,811)	(5,180)	(23,179)
Loans and borrowings (excluding leases and overdrafts)				(37,975)
Deferred tax liabilities				(4,453)
Other unallocated central liabilities				(37,586)
Group liabilities				(103,193)

4.  Profit before tax

Profit before tax is stated after charging/ (crediting):

		2020 £'000	2019 (Restated) £'000
Amortisation of intangible assets		3,059	2,575
Impairment of goodwill		16	-
Depreciation of property, plant and equipment		595	529
Depreciation of right of use assets		717	451
(Gain)/ loss on disposal of property, plant and equipment		(8)	(47)
and right of use assets
Cost of inventories recognised as an expense		25,424	17,646
Impairment of trade receivables		433	542
Net foreign exchange gains		(170)	(206)

5.  Exceptional items

Exceptional items are those which the Group consider to be significant, one-off items that are not incurred as part of the Group's normal operations. 

		2020 £'000	2019 (Restated) £'000
Exceptional income
Insurance proceeds in respect of keyman policies		2,000	-
Total exceptional income		2,000	-

The exceptional income relates to a recovery under keyman insurance policies, following a medical diagnosis, in connection with a member of key management.

		2020 £'000	2019 (Restated) £'000
Exceptional expenses
IPO costs		(522)	-
Refinancing costs		(585)	-
Acquisition costs		(425)	-
Impairment of investments in associates		(875)	-
Total exceptional expenses		(2,407)	-

During the year, the Company completed an IPO. Exceptional legal and professional fees of £522,000 are included within the profit or loss in connection with the IPO. Transactions costs of £2,501,000, directly attributable to the issue of shares, have been included as a reduction in the share premium account.

The Group also undertook a re-financing exercise, incurring exceptional costs of £585,000 in respect of the release of loan arrangement fees, following repayment of the previous term loan on listing, and legal fees associated with the re-financing.

During the year, the Group acquired seven subsidiaries, incurring costs of £425,000. This comprised transaction costs on acquisition of £103,000, in relation to stamp duty, and £322,000 in respect of legal and professional fees directly associated with these acquisitions.

6.  Dividends

	2020 £'000	2019 £'000
Amounts recognised as distributions to equity holders in the year:
Interim dividend for the year ended 31 March 2020 of 0.8678p per share (2019: for the year ended 31 March 2019 of nil p per share)	2,000	-
Total dividends paid in the year	2,000	-

The Directors did not recommend that a dividend was paid for the year ended 31 March 2019.

The Directors recommend that a final dividend for 2020 of 1.085p (2019: nil p) per ordinary share be paid.

The final dividend will be paid, subject to shareholders' approval at the Annual General Meeting, to shareholders on the register at the close of business on 25 September 2020. This dividend has not been included as a liability in these financial statements.

 

7.  Earnings per share

Earnings per share (EPS) is calculated by dividing the profit for the year, attributable to ordinary equity holders of the parent, by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders after adjusting for interest on convertible preference shares, by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The calculation of basic and diluted earnings per share is based on the following data:

	2020			2019 (Restated)
	Earnings £'000	Weighted average number of shares	Earnings per share (p)	Earnings £'000	Weighted average number of shares	Earnings per share (p)
Basic earnings per share	9,291	194,093,236	4.79	6,455	143,168,012	4.51
Effect of dilutive securities   Employee share options	-	582,220	-	-	-	-
Diluted earnings per share	9,291	194,675,456	4.77	6,455	143,168,012	4.51

Based on the 230,458,821 shares in issue after the IPO, basic EPS would have been 4.03p at the year end compared to 2.80p in the prior year, had the same number of shares been in issue.

8.  Business combinations

The Group acquired the entire share capital and 100% of the voting rights in the following companies during the year:

Company acquired	Acquisition date
DSH Flooring Limited	1 April 2019
LBT Brick & Facades Limited	15 May 2019
The Bespoke Brick Company Limited	17 May 2019
The Brick Slip Business Limited	17 May 2019
Brickmongers (Wessex) Ltd	5 July 2019
McCann Roofing Products Limited	13 February 2020
U Plastics Limited	10 March 2020

 

The fair value of the assets acquired and liabilities assumed on acquisition are as follows:

 

	DSH Flooring Limited £'000	LBT Brick & Facades Limited £'000	The Bespoke Brick Company Limited £'000	The Brick Slip Business Limited £'000	Brickmongers (Wessex) Ltd £'000	McCann Roofing Products Limited £'000	U Plastics Limited £'000
Property plant and equipment	3	33	24	-	47	3	219
Right of use assets	-	-	49	55	-	9	836
Identifiable intangible assets	-	1,595	1,999	-	614	1,285	2,805
Inventory	182	-	658	11	433	429	766
Trade and other receivables	517	1,379	3,159	13	736	1,227	1,697
Cash and cash equivalents	7	697	701	24	339	1,105	2,273
Trade and other payables	(543)	(1,198)	(2,480)	(36)	(757)	(1,180)	(2,167)
Lease liabilities	-	-	(49)	(55)	-	(9)	(871)
Deferred tax	-	(276)	(344)	-	(106)	(220)	(506)
Total identifiable net assets	166	2,230	3,717	12	1,306	2,649	5,052
Goodwill	134	382	3,075	13	217	148	2,105
Total consideration	300	2,612	6,792	25	1,523	2,797	7,157

 

Satisfied by:
Cash paid	300	2,612	4,913	20	831	2,750	-
Loan notes	-	-	955	5	554	-	-
Deferred cash consideration	-	-	924	-	-	47	4,950
Contingent Consideration	-	-	-	-	138	-	2,207
Total consideration	300	2,612	6,792	25	1,523	2,797	7,157

Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:

 

	DSH Flooring Limited £'000	LBT Brick & Facades Limited £'000	The Bespoke Brick Company Limited £'000	The Brick Slip Business Limited £'000	Brickmongers (Wessex) Ltd £'000	McCann Roofing Products Limited £'000	U Plastics Limited £'000
Revenue	2,828	6,316	10,253	18	3,617	1,256	615
Net profit	161	385	704	-	129	57	53

Had the business combinations taken place at the beginning of the financial year, the Group's revenue for the year would have been £206,278,000 and Group profit would have been £11,215,000.

Acquisition related costs, included in exceptional expenses (note 14), amounted to £103,000, made up as follows:

 

	DSH Flooring Limited £'000	LBT Brick & Facades Limited £'000	The Bespoke Brick Company Limited £'000	The Brick Slip Business Limited £'000	Brickmongers (Wessex) Ltd £'000	McCann Roofing Products Limited £'000	U Plastics Limited £'000
Transaction costs	-	12	33	-	7	14	37

The Group acquired all of the above subsidiaries in order to expand its network within the UK and increase the range of products that can be offered to its customers.

Goodwill principally comprises the value of expected synergies arising from the acquisitions and the value of the assembled workforce.

 None of the goodwill is expected to be deductible for tax purposes.

  Contingent consideration

A contingent consideration arrangement was agreed during the purchase of The Bespoke Brick Company Limited. Additional cash payments of £300,000 per annum are payable if the entity meets an agreed EBITDA target in the three years following acquisition. In addition, an amount of £0.50 is payable for every £1 that the target is exceeded. These terms are conditional on the former owner remaining employed within the Group. Should the target EBITDA be met and the former owner is no longer employed, the amount payable is £100,000 per annum.

At the acquisition date, the fair value of this contingent consideration was estimated to be £nil as the target EBITDA was not expected to be met. At the reporting date, this was also the case and thus there has been no change in the estimated contingent consideration.

During the purchase of Brickmongers (Wessex) Limited, a contingent consideration arrangement was agreed whereby £0.50 is payable for every £1 that the entity exceeds an agreed EBITDA target in the three years following acquisition.

At the acquisition date, the fair value of this contingent consideration was estimated to be £138,000. The fair value is based on a discounting cash flow model, applying a discount rate of 4.8% to the cash flows that are expected to arise. At the reporting date, the entity was still expected to meet its EBITDA targets and the fair value of the contingent consideration was £143,000. The total undiscounted amount payable is estimated to be £155,000.

A contingent consideration agreement was also entered into during the purchase of U Plastics Limited. An amount of £800,000 per annum is payable, if an agreed EBITDA target is met in the three years following acquisition. The annual amount is reduced on a £1 for £1 basis for any shortfall below the target. However, any shortfall in the first and second year will be repaid at the end of the third year if the target EBITDA is exceeded at the end of year three for all three years, up to a maximum of £2.4m.

At the acquisition date, the fair value of the contingent consideration was estimated to be £2,208,000. The fair value is based on a discounting cash flow model, applying a discount rate of 3.5% to the cash flows that are expected to arise. The fair value at the reporting date was £2,214,000 and the total undiscounted amount payable is estimated to be £2,400,000.

In the prior year, a contingent consideration arrangement was entered into on the purchase of CPG Building Supplies Limited. Under the terms of the agreement, an amount is repayable by the seller if an agreed EBITDA target is not met in the three years following acquisition. The amount repayable would be equal to any shortfall on a £1 for £1 basis.

At the acquisition date, the fair value of the contingent consideration was estimated to be an asset of £201,000. This was based on a discounted cash flow technique, with expected cash flows discounted by 4%. The fair value of the asset at 31 March 2019 was £204,000, with the undiscounted receivable estimated to be £222,000. At the reporting date of 31 March 2020, no contingent consideration is expected to be received and thus the contingent consideration receivable has been reduced to £nil.

The Group acquired PVH Holdings Limited and its subsidiaries on 6 March 2018. This also included a contingent consideration agreement. If an agreed EBITDA target is met, a further amount is payable at a rate of 0.6 x the excess over the EBITDA target. If the target is not met, an amount is repayable at the same rate.

At the acquisition date, the fair value of the contingent consideration was an asset of £452,000. The amount that became repayable was £96,000. Under the terms of the contract, amounts repayable are permitted to be deducted from the contractual deferred consideration due. The associated contingent asset has therefore been presented within other payables, alongside the contractual deferred consideration.

At 31 March 2019, performance had improved and thus the contingent consideration was remeasured at an amount payable of £770,000, for the remaining two years. An amount of £627,000 was subsequently paid in connection with the second year following acquisition. At the reporting date of 31 March 2020, the fair value of contingent consideration was estimated to be £nil. The fair values are again based on a discounted cash flow model and anticipated payments or repayments. A discount rate of 4.7% has been applied to the anticipated cash flows.

 

9.  Loans and borrowings

	Group			Company
	2020 £'000	2019 £'000	As at 1 Apr 2018 £'000	2020 £'000	2019 (Re-stated) £'000
Current
Bank loans	-	3,053	3,158	-	-
	-	3,053	3,158	-	-
Non-current
Bank loans	24,912	33,369	34,817	24,912	-
Loan notes	-	28,966	24,901	-	-
	24,912	62,335	59,718	24,912	-
	24,912	65,388	62,876	24,912	-

 The Directors consider that the carrying amount of loans and borrowings approximates to their fair value.

       The bank loans are secured by a fixed charge over the Group's freehold property and floating charges over the remaining assets of the Group, including all property, investments and assets of the company's subsidiary undertakings. A guarantee has also been provided by trading subsidiaries.

 Included within non-current borrowings is an amount of £ nil (2019: £28,966,000) in respect of liabilities payable or repayable otherwise than by instalments which fall due for payment after more than five years from the reporting date. These liabilities were A series, B series and B1 series loan notes which accrued interest at 9.5% per annum. Both interest and capital were repayable on the loan notes redemption date of 13 September 2026. The loan notes were secured by fixed and floating charges over the assets of the company.

 These loan notes were settled during the year by way of cash settlement and conversion to equity.

10.  Availability of annual report and accounts

The accounts for the year ended 31 March 2020 will be posted to shareholders on or before 16 September 2020 and laid before the Group at the Annual General Meeting on 29 September 2020.  Copies will be available form the Company Secretary at Brickability Group plc, South Road, Bridgend Industrial Estate, Bridgend, CF31 3XG or from the website www.brickabilitygroupplc.com .

 

END

 

 

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